Factors to consider while insuring your new two-wheeler

Some people consider two-wheeler insurance as a luxury over a necessity ignoring the fact that they are bought for protecting their life and asset at the time of an unforeseen event like a road accident, theft, and third-party liability.

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Before heading on to buying a two-wheeler insurance policy, you might have to take the following crucial points into consideration to avoid regretting them later.

The decision to buy a two-wheeler is not made in a fortnight. However, it takes a number of weeks or maybe months to come up with a brand, model, and variant that meets your requirements. 

Likewise, a similar thought process is needed to choose the right insurance partner for your brand-new two-wheeler. 

Sumit Chhazed, Co-founder and CEO, of OTO, says, “Some people consider two-wheeler insurance as a luxury over a necessity ignoring the fact that they are bought for protecting their life and asset at the time of an unforeseen event like a road accident, theft, and third-party liability.”

Thus, under Motor Vehicles Act, the Government of India has made it mandatory for every bike owner to purchase a two-wheeler insurance policy to protect the rider and the bike from inevitable expenditure in the events that come out of the blue. 

Therefore, according to experts before heading on to buying a two-wheeler insurance policy, you might have to take the following crucial points into consideration to avoid regretting them later.

1. Type of policy

There are numerous two-wheeler insurance providers in the market. As a result, you are free to choose any as per your preference. But, when it comes to the type of policies, there are essential: –

  • Third-party policy – “Indian Government has made it mandatory for every bike owner to insure their two-wheeler under the third-party insurance plan. The policy ensures to protect against the damages caused by you to a third party’s asset/ property and does not cover theft or damage to your own vehicle,” explains Chhazed. 
    • Eg – Permanent injury, death of a person, damage to property
    • The policy is valid only for 1 year and will require you to renew it every year unless the policy is for the long term.
  • Standalone own – As the name suggests, it covers the own damage sustained due to accidents, theft, fire, and natural and manmade calamities. Under this, Chhazed says, “the policyholder can choose to get a standalone and third-party policy from the same or a different insurer. Further, the insured gets to expand the coverage with the help of add-ons.”
  • Comprehensive – The policy is the combination of both third party and standalone own that protects you from damages caused by you along with the third party expenditure. For instance, if your electric bike or two-wheeler gets damaged in a fire, you may claim compensation based on the norms of the plan. 
  •   Add ons – Just like the name suggests, Chhazed explains, “these are the additional coverages that one can avail of with comprehensive or standalone policies and it further strengthens the coverage.” Such coverages come with an additional premium but are worth every penny. 
  • Zero Depreciation Cover – An asset is bound to depreciate with the passage of time. Usually, the depreciation of two-wheelers is borne by the policyholder. But with this add-on, the insurer can claim for the depreciation expenses.
  • Others – Loss of personal belongings, Tyre damage cover, daily allowance, engine safe cover, key loss cover, passenger assistance cover, protection of NCB, road assistance cover and consumables cover, return to the invoice.

2) Insured Declared Value (IDV) 

IDV represents the current market value of the vehicle. The IDV is the maximum amount you can claim in case of loss and the value decreases as the age of the bike increases.

3) Insurance premium 

The insurance premium is dependent upon many factors. The prime factor out of them has to be cubic capacity. Chhazed explains, “According to the India motor tariff, the cubic capacity is classified as 0-150CC, 150-350C, and 350CC and above. The higher the cubic capacity, the higher the amount. Another dependent factor is location. As per location, there are Zone A & Zone B. Cities falling under Zone A attract higher premiums than the latter.” 

4) Claim settlement ratio

CSR determines how efficient an insurance company is in settling insurance claims. It denotes the ratio between the claims paid by the insurance company and the total number of claims incurred during a particular financial year. So, Chhazed says, “to make a better decision, one should be aware of one’s insurance provider’s CSR.”

5) No claim bonuses

NCB is an additional bonus rewarded to the insured by the insurer for not claiming damages in a particular year. “The insured gets a discount up to a maximum of 50 per cent on their premium when the insurance is renewed next year,” adds Chhazed.

6) Digital purchase

Opting to buy insurance online comes with a number of benefits as it comes with no middlemen or agents thus there will be no commission thereby reducing the policy cost. Besides that, experts point out there is no paperwork and it is the most cost-effective than traditional buying thus reflected in the form of low-cost premiums. 

Chhazed concludes, “With all that being said, make a rational decision before buying two-wheeler insurance considering the aforementioned factors and the credibility of the insurer. As once a decision is made, there is no going back.” 

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